Why are smart cities proving to be so hard to deliver?

Abstract

There are no smart cities on our planet. Some may claim to be smart, but none of them come close to implementing a fraction of the technology and systems set out by this journal or indeed by any other journals and organisations dedicated to promoting the concept.

Perhaps it is time we asked ourselves why this is the case. After all the idea has been around for decades and in that time we have seen revolutions sweep through manufacturing, retail and sectors such as telecoms and IT. There are plenty of technologies available for deployment. So are Smart Cities a bad idea? Is it that developing a Smart City just takes time? Or is there something preventing them from emerging?

I think something is preventing us from implementing the ideas embodied in the phrase ‘Smart City’ and unless we address it progress will be painfully slow or non-existent.

Eric Beinhocker in his book ‘The Origin of Wealth’ sets out three ingredients for economic growth: Technology, Governance and Business Models. He argues that you need all three to make progress. No amount of technology and entrepreneurial ambition will generate wealth if there are no property rights, laws or regulations governing the market. And if the Business Model doesn't make sense then you can't create companies and generate new value. We are missing both the Governance and the Business Models for Smart Cities.

Let's look at Governance first. Cities are a complex mess of developers, businesses, private individuals, local government, and public institutions. Many of these interests have narrow goals. The role of Governance in this case is to align these narrow goals and to ensure that each actor bears the true cost and receives the true benefit. Technically this might seem straight forward. After all isn't it obvious that developers impose costs in terms of transport and services and should contribute accordingly?

It's not so simple. For example, an individual trying to drive to work will not consider the extra congestion they introduce (what economists call an externality). In some cities, congestion charging or other traffic management has been introduced so that the individuals make decisions which are better for the economy and society. In some places (including Cambridge UK where I live) the individual's right to choose to drive has been thought to be more important.

We are a long way from having governance models for cities which align incentives and have the various actors paying the true costs and receiving the true benefits. Without the market mechanisms and the regulations and standards by which such markets would operate, it is unlikely that anyone will develop long term viable business models. Without these business models, we will not see the investment needed to create Smart Cities.

In telecommunications, where I started my career, the blockages which prevented innovation were solved by creating markets which could operate on agreed standards. Licensing mobile phone operators based on the GSM standard was one example. The creation of TCP/IP and the world wide web was another. Few foresaw how those would create the conditions for the explosion of innovation that followed, although Brain Arthur explains some of this in his book ‘The Nature of Technology’.

We can all envisage a future in which zero carbon cities provide transport, employment, living conditions, health, education and quality of life. We can all describe some of the technologies and how they might be used to deliver those things. We know that autonomous vehicles will revolutionize public and private transport perhaps leading to services which are purely on demand. But we also know that the physical layout of the city can lead to diseconomies of scale - 20% of the land in Los Angeles is devoted to roads and parking lots. How can we ensure that land use and planning is integrated with transport so that we get more efficient and robust outcomes?

Creating a new governance system for something as complex as a city is an order of magnitude more difficult than reforming telecommunications regulations. We won't be able to make the rapid breakthroughs that we have elsewhere. But we do need to start thinking about cities as complex systems driven by the incentives of the organizations and individuals that live and work there where few incentives align, externalities abound and new markets based on the standards and regulations will need to be created.

The stakes are high, and with the advent of COVID have become even higher. Cities are sources of innovation and wealth generation. If we can enable cities to function efficiently and sustainably and to provide a good quality of life for the people that live and work in them then we are helping secure long-term prosperity. COVID has highlighted two weaknesses in how we run our cities: our systems lack both resilience and an ability to change and adapt quickly. COVID is an immediate and pressing problem, and with any luck will pass leaving both destruction and innovation in its wake. But the need for resilience and adaptation will remain.

We need to take this systems’ view and understand that governance and business models must stand alongside technology. Unless we bring insights from economists, other social scientists, health experts, and lawyers, then the Smart City will forever be just the dream of the technologist and a sound bite for the politician.

David Cleevely is the Chairman of the Raspberry Pi Foundation. He is the founder and former Chairman of telecoms consultancy Analysys (acquired by Datatec International in 2004). In 1998, he co-founded the web-based antibody company Abcam (ABC.L) with Jonathan Milner and was Chairman until November 2009. He has invested in over 60 companies including the award winning restaurant ‘Bocca di Lupo’ and its gelateria subsidiary, Gelupo.

He was co-founder and chairman of Cambridge Network, Cambridge Wireless and Cambridge Angels and co-founder of Cambridge Ahead. In 2012 he co-founded the Cambridge Science Centre where he is Chair of the Board of Trustees. He helped set up the Cambridgeshire and Peterborough Independent Economic Review and was Vice-Chair of the Commission which issued its final report in September 2018 and he currently chairs the Cambridge Autonomous Metro (CAM) Technical Advisory Committee.

He chairs three committees for the Royal Academy of Engineering (Enterprise Committee, COVID-19 Triage Committee and the Policy Fellowships Working Group) and is a member of the IET Communications Policy Panel For 8 years until March 2009 he was a member of the Ofcom Spectrum Advisory Board. From 2001 to 2008 he was a member of the Ministry of Defence Board overseeing information systems and services (DES-ISS, formerly the Defence Communications Services Agency).

After being sponsored to study Cybernetics at Reading by Post Office Telecommunications, he joined their Long Range Studies Division. A PhD at Cambridge was then followed by the Economist Intelligence Unit in London. He is a Fellow of the Royal Academy of Engineering and the IET. In 2009 he was appointed the Founding Director and Executive Committee Member of the Centre for Science and Policy, University of Cambridge and stepped down in 2015 becoming Chairman of the Advisory Council. He was elected a Fellow Commoner of Queens College, Cambridge in 2013 and an Honorary Fellow of Trinity Hall in 2015. He was awarded a CBE in the Queen's New Year Honours List in 2013.